Knotel plan of liquidation and statement approved on interim basis

By Sarah Lizee

Olympia, Wash., May 13 – Knotel, Inc.’s combined Chapter 11 plan of liquidation and related disclosure statement were approved on an interim basis on Wednesday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

A combined hearing on final approval of the disclosure statement and confirmation of the plan is scheduled for June 29.

According to the plan, the debtor-in-possession facility claims were partially satisfied through the sale of the company’s assets to Digiatech, the company’s DIP lender and an affiliate of Newmark Group, Inc. The transaction included a purchase price of $70 million in the form of a credit bid, subject to adjustments, $6.81 million in cash, and the assumption of certain liabilities.

Digiatech will not receive any distribution on account of the DIP facility claim or any deficiency claim, as that has been waived as part of a settlement between Knotel, the official committee of unsecured creditors and Digiatech.

The pre-petition first-lien claim was included as part of the roll-up DIP loans and any remaining amounts owed to Digiatech as part of the pre-petition first-lien claim were fully satisfied through the sale and credit bid.

The pre-petition second-lien claim was partially included in the roll-up DIP loans and was fully satisfied through the sale and credit bid.

Bridge Bank has been granted relief from the automatic stay to exercise its rights against some cash collateral. In addition, JPMorgan has exercised or may exercise its rights against some cash collateral related to letters of credit. JPMorgan’s recovery against the debtors is limited to any cash collateral securing the letters of credit and it is not entitled to receive a distribution from the debtors or the liquidating trust.

The intercompany promissory note in favor of Knotel has been satisfied through a credit bid for the Knotel Canada assets in connection with the sale to Digiatech and the promissory note has been canceled.

Administrative expense claims incurred prior to March 24 are the responsibility of the purchaser and, as such, will not receive a distribution from the debtors or the liquidating trust.

The purchaser is also responsible for payment of certain taxes and, as such, holders of claims related to those taxes will not receive a distribution from the debtors or the liquidating trust.

Other administrative expense claims, other priority tax claims, other priority claims and professional fee claims will be paid in full in cash.

Holders of general unsecured claims will receive their pro rata share of the cash to be distributed from the liquidation trust, if any, after payment of all liquidating trust expenses and all senior claims.

Holders of interests in the debtors will retain no ownership interests and will receive no distribution.

New York-based Knotel operates a flexible workspace platform that matches, tailors and manages space for customers. The company filed bankruptcy on Jan. 31 under Chapter 11 case number 21-10146.

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